[SMM Analysis] NCM Post-Holiday: High Costs Intensify Negotiations, March Recovery May Fall Short of Expectations

Price Trends

From a raw material cost perspective, ternary cathode material prices are expected to remain firm from late February to early March, with some room for upside. On nickel sulfate, rising nickel prices have pushed up production costs, strengthening salt producers' willingness to hold firm on prices. On cobalt sulfate, continued depletion of domestic cobalt raw material inventories is expected to drive further price increases as manufacturers restock on a need basis. On lithium, international market volatility drove lithium carbonate prices higher after the holiday, with lithium hydroxide following suit. Overall, cost-side support remains strong.

In terms of transaction sentiment, most battery manufacturers have already signed February long-term contracts or completed pre-holiday stockpiling, meeting their production needs for this week. Amid rising raw material prices, spot buying interest remains generally subdued. However, given the limited number of effective working days this month—with only a few trading days left in February—and the fact that some manufacturers have yet to finalize their March orders, this week is expected to be a key window for price negotiations and order placements.

On payable factors, despite expectations of further nickel price increases, battery manufacturers' acceptance of higher payables for nickel sulfate remains limited, and the payable is expected to remain largely stable. On cobalt sulfate, due to ongoing raw material shortages, domestic cobalt resources are about to enter their tightest phase before the arrival of overseas cobalt intermediates. Payables for cobalt sulfate may therefore rise. Meanwhile, lithium carbonate and lithium hydroxide remain volatile at high levels, leaving limited room for further increases in payables.

Supply and Demand

On the demand side, January saw a notable decline in domestic new energy vehicle sales, impacted by the halved purchase tax policy. EV sales performance in the first quarter is expected to remain weak, with February likely marking a trough. On the supply side, some leading ternary cathode manufacturers conducted routine maintenance in February, affecting production volumes. As a result, domestic ternary cathode production in February is expected to decline by approximately 15% MoM.

Looking ahead to March, production is expected to rebound as operations resume and the traditional demand recovery period begins. However, due to sluggish auto sales, weak overseas demand for ternary materials, and persistently high raw material prices, the pace of recovery may fall short of pre-holiday expectations. Currently, domestic ternary cathode production in March is projected to increase by 10% to 15% MoM.